The frequent cause for the downfall of those in power is hubris, an exaggerated self-confidence that causes an individual to ignore the warnings and advice of others who know what they are talking about.
Donald Trump is particularly susceptible to this character flaw, since he has repeatedly proven the “experts” wrong, both in his business life and his political life. Multiple bankruptcies did not do him in, nor did multiple impeachments and multiple indictments. He has such confidence in his own instincts that he habitually ignores evidence to the contrary.
He’s doing so again with the trade war he has started, imposing tariffs of 10% to 50% on much of what is imported into this country. He holds a longstanding conviction that high U.S. tariffs will cause companies to manufacture more in this country and reverse the decades-long trend of outsourcing production to foreign lands, where the labor is much cheaper and the government regulations less strict. He acknowledges there may be some initial pain for Americans in terms of higher consumer costs and lower stock prices, but he believes they will be both modest and short-lived, and well worth the long-term payoff in manufacturing gains.
Most are telling Trump that he’s wrong. The stock market has been swooning since last week’s tariff announcement, suffering its worst decline since the outbreak of COVID-19 five years ago. Economists are saying that there’s no reversing economic globalization, that a protectionist trade war led by the world’s richest nation will only produce a global recession. Even some of his Republican allies in Congress, who have been mostly content to let Trump do whatever he wants, are asking him to pull back.
So far, the president isn’t listening. Instead, he is doubling down, threatening to impose even higher tariffs if nations continue to respond with higher tariffs of their own.
The sense coming out of the chaos is that the president and his team are gambling with the financial welfare of the world based on emotion rather than reason, not even checking their numbers to be certain their economic assumptions and calculations are accurate.
Brent Neiman, a Treasury official during the Biden administration, has looked at the numbers and says the Trump tariffs are on average about four times larger than they should be if the stated goal is to treat other countries the way they treat us.
Not only is the math wrong, but so is the logic. The president says he wants the nation to have a trade surplus with every country, but that’s a fool’s errand. It will never happen unless our nation wants to downgrade to “third world” status. We buy more from most other countries than they buy from us because we are wealthier. Trade deficits can be a sign of prosperity, not weakness.
They also reflect the nature of business relationships, which are not the same country to country, any more than they would be person to person. Neiman, writing this week in The New York Times, uses an analogy made by the late Nobel Prize-winning economist Robert Solow, to explain the point. “I have a chronic deficit with my barber, who doesn’t buy a darned thing from me,” Solow quipped.
Trump’s pride keeps him from taking all this in. He believes he’s smarter than the combined financial wisdom of most economists, economic historians and Wall Street. To reverse course on a core belief of his would be completely uncharacteristic. He is convinced he will defy conventional wisdom yet again.
If he stays the course and ends up being wrong, if prices soar and retirement earnings tank, Trump will prove why no person and no political party in America stays in control for long. Hubris eventually does them all in.
